Canadian firm seals supply deal for planned LNG export project

TORONTO (ICIS news)--Canadian firm Kitimat LNG has reached a gas supply deal for its planned 700m cubic feet/day liquefied natural gas (LNG) export terminal in Canada’s western British Columbia province, the company said on Tuesday.

Kitimat, a Calgary-based, privately-owned firm, agreed to a memorandum of understanding for up to 300m cubic feet/day of long-term gas supplies from gas firm Apache, after having earlier reached a similar deal with gas firm EOG Resources.

The project at the ?xml:namespace>Port of Kitimat in British Columbia would supply markets in Asia after becoming operational around 2013/2014.

The Kitimat LNG export terminal project comes amid forecasts of increasing natural gas supplies in western Canada and the US.

Industry observers said that only three years ago, North American gas supplies were feared to be in permanent decline, with the region bound to become dependent on imported LNG.

In response, many firms, including a company partly owned by Dow Chemical, put forward plans for LNG import terminals, but certainly not export terminals.

While most of these plans have been shelved, Canada’s Irving Oil earlier this year started up the first phase of its 1.2bn cubic feet/day grassroots LNG import terminal in the country’s eastern New Brunswick province, the first such project on North America’s east coast in 30 years.

However, new technologies have led to major new gas discoveries in North America, leading to oversupply and price declines. Gas prices are now below $4/ million British thermal unit (m Btu), down from a $13/m Btu only a year ago, analysts said.

Methanex, the world's largest supplier of methanol, said in May it could consider restarting its long-closed 470,000 tonne/year plant in Medicine Hat, Alberta, since low natural gas prices could make the facility viable again.